Uber’s Passenger Acceptance Rules: More Evidence of Employee Status

I’ve been reading Alex Rosenblat’s excellent work on Uber, and want to emphasize one of her findings, a finding that is highly relevant to the employment question but one that we haven’t highlighted sufficiently on the blog. (For other coverage of Rosenblat’s findings, see here).

In a paper co-authored by Luke Stark, Rosenblat describes what she calls Uber’s “blind passenger acceptance” rule. In brief, the rule prevents drivers from knowing a passenger’s destination at the time the passenger requests a ride. The result is that drivers cannot actually decide whether to accept a ride based on an assessment of whether the ride is likely to be highly profitable, marginally profitable, or not profitable at all. Put differently, the acceptance rule that Rosenblat identifies means that Uber drivers are unable to assess the economic value of the ride before deciding whether to accept it. (And the “blind passenger acceptance” rule operates against the background of another Uber policy: drivers are required to maintain high ride acceptance rates, or face “time outs” from the app.) Here’s Rosenblat and Stark’s description:

When active Uber drivers receive a ride request through the system, they have about 15 seconds to accept it or reject it. When Uber drivers accept a ride request, they take on the risk that the ride’s fare will not be profitable; yet, drivers are not shown destination or fare information before they accept a ride. Jason from Raleigh, North Carolina, who had driven for about a year, said, “You’re driving around blind. When it does ping, you might drive 15 minutes to drive someone half a mile. There’s no money in it in that point, especially in my SUV.” Although hiding the destination before a driver chooses to accept or decline a ride request can potentially prevent destination-based discrimination (Smart et al., 2015), it can also foster reduced wages for drivers.

The “blind passenger acceptance policy” has clear relevance to the legal analysis of whether Uber drivers are employees or independent contractors. Take the D.C. Circuit’s highly restrictive test in FedEx Home Delivery where the court held that the animating question in independent contractor/employee cases is “whether the position presents the opportunities and risks inherent in entrepreneurialism.” Or, similarly, take the Restatement’s new definition:

[A]n individual renders services as an employee of an employer if [] the employer [] effectively prevents the individual from rendering those services as an independent businessperson.

The essence of both these prominent formulations is that an independent contractor is someone who can operate as an entrepreneur, or as an independent businessperson, would operate. Can we imagine any genuinely entrepreneurial or independent-business context in which the entrepreneur is prevented from knowing the essential details of the transaction before she decides whether to enter into it? To the contrary, the essence of independence is the ability to decide – based on relevant information – whether to engage in a business transaction. By depriving drivers of the ability to know a passenger’s destination, Uber prevents drivers from making an independent assessment of the ride proposed and thus from making a genuinely independent business judgment about accepting the ride. Uber thereby prevents the individual driver from rendering its services as an independent business person would.

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